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Matthew Vella
The price of kerosene has scrambled back and forth exasperatedly and been turned into an ‘anti-abuse’ strategy led by politicians – for the second time, kerosene has been hit by an impromptu price hike, but in this round it’s the chickens coming home to roost again for a Nationalist administration.
Kerosene, still used as a fuel for heating and cooking in some households, has widely ceded to the omnipotence of electricity – according to official government figures, households spent just Lm300,000 on kerosene out of a total of Lm2 million spent in 2003 (18.5 million litres).
So where has the rest gone? Trucks, large vehicles, and buses, with their pungent fumes betraying the secret brew that powers them: an illegal mix of diesel and kerosene that not only delivers deleterious effects to the environment, but also costs the state Lm2.5 million yearly in potential VAT and excise duty from diesel sales, more than double what is actually reaped from current diesel sales.
Government’s answer was to level kerosene and diesel prices, so now kerosene costs 35c4 a litre instead of 16c9, and will start fluctuating according to international prices.
The hike was no good news for the remaining domestic consumers of kerosene – over 27,000 households according to the Ministry for Investment, Industry and Informatics – especially low-income earners such as pensioners who still use kerosene for cooking. Their compensation will be a one-off Lm12 payment from the government.
But why has the price of kerosene increased so late in the day?
Initially, it had been a Labour government to increase kerosene prices by 70 per cent, from 10c a litre to 17c5 back in 1997. Then, little less than a year after, the newly-elected Nationalist government brought the price back down to 12c5 a litre, still high on its re-election buzz.
Questions asked are why does the hike come so late in the day when the price of kerosene was already increased in 1997. After its climb-down in 1999, the price rose by less than one cent a year until 2004, but the increase in kerosene consumption was clearly visible, especially due to large vehicles.
Official statistics in fact show that consumption of kerosene in August, although at an all-time low, was not much different from other months. Whilst the December-March season saw consumption averaging at two million litres a month, August’s rate was just under the normal rate of one million litres consumed every month, suggesting that if kerosene was not being used for heating, then it had to be going somewhere else.
Between 2002 and 2003, kerosene consumption would increase from 15 million litres to 18 million. Although Lawrence Gonzi claimed in his budget speech that 22 million litres had already been consumed by September 2004, the figure is potentially incorrect given that official figures show that 13 million litres had been consumed by August.
Whatever the reason for the reduction, the latest hike has not brought any great joy – the 104 per cent increase on kerosene means that although the public coffers are expected to gain Lm2.5 million in VAT and excise from diesel sales, domestic users face the brunt. The price of Maltese bread rose by 2c following the kerosene hike, after it had been the government itself, according to the Bakers Cooperative, who urged bakers to switch from wood to kerosene-fire equipment. Households, who use only a third of their kerosene consumption for heating, will now have to rethink their priorities – kerosene costs more than twice what it had ever been before.
matthew@newsworksltd.com
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